Jeweller - February 2022

Editor’s Desk
Retail is dead. Long live retail!
For more than a decade, people have been predicting the end of physical stores as choice and convenience lured
customers away from the streets and into the cloud. But one thing is certain, and as demonstrated by the past
two years, nothing is as ever as it first seems. ANGELA HAN explores what the future holds for retail.
“Retail is dead,” shouted some experts!
In fact, so sure have some doomsayers
been about the demise of retail that a
new term was coined: ‘retail apocalypse’.
The notion started around 2010 soon
after the Global Financial Crisis when
many major retailers began closing their
brick-and-mortar retail stores, especially
international chains.
The term gained prominence around 2017
when it was first mentioned in The Atlantic
to describe major retail bankruptcies
and mass store closures of major US
chains. Only two years later in 2019 – just
before the pandemic – the US witnessed
approximately 10,000 more businesses
close their doors, which was reported as
a 60 per cent increase on the year before.
So it’s understandable that the harbingers
of doom were already painting a dire
picture of the future of retailing – a decade
on, the prophecies were all coming true.
Then finally in 2020 the real impact took
hold, as COVID-19 went global.
You could hear Chopin’s Funeral March
while watching the retail dominoes
collapse – the pandemic was the final kiss
of death, especially for businesses that
were on life support, the pundits predicted.
As of May 2020 only a few months into the
pandemic, store closures and bankruptcies
catalysed. Household names and
department stores such as J. Crew, Neiman
Marcus, and JCPenney were among the
first major retailers to file for bankruptcy,
although it is arguable that trouble was
already brewing long before COVID.
While an exact figure is almost impossible
to ascertain, it was reported that a further
12,000 retailers had closed stores across
the US in 2020 alone. According to a 2021
UBS Group report, it’s anticipated a further
80,000 US stores are expected to shut
shop in the next five years with onequarter
of US shopping centres also
expected to permanently close.
The US economy is often seen as a
bellwether for what happens here in
Australia. So what does this mean for
the future of retail?
Closer to home, it has been reported
that between 1,000 to 2,000 retail stores
collapsed in 2020 and 2021 following
on from a dismal year of pre-pandemic
trading through 2018-19. Whether or
not this estimate includes small shops
on suburban strips is unknown, but it’s
fair to say that no one was exempt from
feeling the turbulence of the pandemic
rollercoaster.
Two years in, a quick stroll down the street
reveals a string of ‘For Lease’ signs and
storefronts closed until further notice. From
K-mart to Woolies, we’re seeing empty
shelves, a lack of staff and supply chain
turmoil. These problems side-by-side make
it easy to assume that we’re right in the
middle of the, so-called, retail apocalypse.
However, the wise and percipient know
from past experience that economic
instability and the challenges therein can
lead to new opportunities. Instead, these
events can simultaneously expose existing
weaknesses and strengthen the position
of a business.
Indeed, while COVID-19 has accelerated
store closures, it’s also ushered in a wave
of digital revolution for the retail sector.
With consumers now living, thinking
and shopping differently, businesses
have been forced to evolve and further
experiment with what works and what
doesn’t – a playground to freely explore
the opportunities that had been put off.
Certainly, if you were dragging your feet
before 2020, the pandemic dragged you
by the hair into the new world.
KPMG’s 2021 Australian Retail Outlook
Survey indicated that despite a huge shift
towards omni-channel models – where
more than 70 per cent of retailers have
to increase their investment in digital
technology – 25 per cent of respondents
said their websites generate no revenue and
21 per cent said that less than 5 per cent
of their revenue comes from e-commerce.
Fewer than 10 per cent of retailers
indicated that their e-commerce platform
generates up to 50 per cent of revenue.
This is a double-edged sword: while there
has been extraordinary development and
growth in e-commerce, it’s clear that
consumers still prefer to spend more
in-store, which is a welcome revelation
in amidst all the doom and gloom of the
retail apocalypse.
As customers have been forced into
e-commerce, whether they liked it or
not, The Law of Unintended Consequences
came into play: firstly, people came to
You could hear
Chopin’s Funeral
March while
watching the
retail dominoes
collapse –
COVID-19 was
the final kiss of
death, especially
for businesses
that were on
life support,
the pundits
predicted.
realise the importance of a tangible in-store
shopping experience and secondly, with a
surge in delivery fees and delay in delivery
times, the price of items both instore and
online became comparable.
Coupled with this, the Australian Bureau
of Statistics’ most recent turnover estimate
(November 2021) for retail businesses,
which include both physical store and
online sales, is reported to have risen
7.3 per cent month-on-month and
increased 5.8 per cent on 2020. In essence,
people haven’t stopped shopping, and
instead, their consumption has increased.
Moreover, what has come to light since
2020 is to what degree consumers enjoy
shopping for jewellery.
In October 2020 I wrote: “When compared
to other retail categories, there’s ample
evidence that many fine jewellery retailers
have remained resilient during the COVID
pandemic and economic crisis”, which was
backed up by soaring Pandora and Tiffany
stock prices.
“Hong Kong retailer, Chow Tai Fook, had
seen its shares rocket back to its 2018
heydays and both Michael Hill International
and the US chain, Signet Jewelers, were
recovering since the huge sell off in the
depths of the crisis and LVMH stock prices
are back to what they were pre-COVID.”
And now, 15 months further on, Pandora
has recorded all-time high revenue while
Michael Hill reports its best second quarter
in history. Richemont group’s sales have
reportedly exceeded that of pre-COVID and
even local jeweller Linneys reported historic
Christmas trading. Sales are booming!
In this month’s feature – The Great Retail
Reset – we look at the ‘retail apocalypse’
from a different standpoint. Sure, while
the catastrophic effects of the pandemic
cannot be ignored, it has equally been an
opportunity for brave and savvy retailers
to reinvent, redefine and rebirth.
In March 2020, I gave my humble advice
in these difficult times: if you want to
prepare yourself against the horsemen
of the apocalypse, don’t build a bunker –
learn to ride a horse!
It appears that some have gone a step
further and learned to tame a herd.
Angela Han
Publisher
February 2022 | 11